On May 7, 2020 Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical company developing multifunctional biotherapeutics, reported financial results for the first quarter ended March 31, 2020 (Press release, Zymeworks, MAY 7, 2020, View Source [SID1234557297]).
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"While the COVID-19 pandemic has presented unprecedented global challenges, the entire Zymeworks team remains committed to our mission of returning patients home to their loved ones, disease free," said Ali Tehrani, Ph.D., Zymeworks’ President & CEO. "The clinical trials for our lead candidates, ZW25 and ZW49, provide potential options for patients whose cancer has become refractory to the standard of care. I am extremely proud of how our team, our collaborators, and our clinical investigators have responded to ensure that patients enrolled in our studies continue to receive their treatments as we advance these therapies through the clinic."
Dr. Tehrani added, "With a strong balance sheet and runway into 2022, substantial drug supply, and clinical trials in diverse sites around the globe, Zymeworks is well-prepared to continue moving forward through these challenging times. We look forward to providing a corporate update midyear to share our progress."
COVID-19 Business Update
Zymeworks continues to closely monitor the COVID-19 pandemic and adapt its business operations while prioritizing the health and well-being of patients, clinical investigators, and personnel. In accordance with recommendations from health authorities, Zymeworks has transitioned to a remote working arrangement to protect employees and the broader community while maintaining business continuity. All clinical trial sites remain open and active with a heightened focus on patient safety and data integrity. While the effects of the pandemic are expected to slow the pace of patient recruitment due to the diversion of healthcare resources to COVID-19 response activities, they have not had a material impact on the company’s financial condition, liquidity, or longer-term strategic development and commercialization plans. Following the guidance of local health authorities, Zymeworks has begun implementing plans for employees to return working on site.
First Quarter 2020 Business Highlights and Recent Developments
•Strong Financial Position; Extended Runway
Zymeworks completed an upsized public financing with gross proceeds of US$320.8 million and ended the first quarter with $562.7 million in cash resources. Based on current operating plans, Zymeworks expects to have cash to fund research and development programs and operations into 2022 and potentially beyond.
•ZW25 Advances in Three New Global Clinical Trials
Zymeworks’ partner BeiGene dosed the first patient in a Phase 1b/2 trial evaluating ZW25 in combination with chemotherapy as a first-line treatment for patients with metastatic HER2-positive breast cancer and in combination with chemotherapy and BeiGene’s PD-1-targeted antibody tislelizumab as a first-line treatment for patients with metastatic HER2-positive gastroesophageal adenocarcinoma (GEA). In addition, Zymeworks initiated a Phase 2 trial and collaboration with Pfizer to evaluate ZW25 in combination with palbociclib and fulvestrant in HER2-positive, hormone receptor-positive breast cancer.
•ZW49 Continues to Advance in Phase 1 Dose-Escalation Study
An update in January highlighted that there had been no dose-limiting toxicities observed and the maximum tolerated dose had not been reached. The majority of treatment-related adverse events were grade 1 or 2, and were reversible and manageable on an outpatient basis. Preliminary results from these initial dose cohorts included anti-tumor activity.
•Strengthens Commercial Leadership and Board of Directors
James Priour recently joined as Senior Vice President, Commercial, providing invaluable direction as Zymeworks begins registration-enabling trials with ZW25 this year. Before joining Zymeworks he held various international commercial leadership roles with Procter & Gamble Pharmaceuticals, Bristol Myers Squibb, and most recently at Amgen where he was the Global Product General Manager for Kyprolis and the early myeloma pipeline. Zymeworks also appointed Dr. Kelvin Neu, Partner at Baker Bros. Advisors LP, to the Board of Directors adding clinical knowledge and partnering expertise.
Financial Results for the Quarter Ended March 31, 2020
Revenue for the three months ended March 31, 2020 was $8.3 million as compared to $11.9 million in the same period of 2019. Revenue for the first quarter of 2020 included recognition of a $5.0 million development milestone and $2.2 million in drug supply revenue under the license and collaboration agreements with BeiGene as well as $1.1 million in research support and other payments from Zymeworks’ partners. Revenue for the first quarter of 2019 related primarily to an $8.0 million development milestone payment under the license and collaboration agreement with Lilly, recognition of $3.5 million of deferred revenue from the licensing and collaboration agreement with BeiGene, as well as $0.4 million in research support payments.
For the three months ended March 31, 2020, research and development expenses were $36.5 million as compared to $17.5 million in the same period of 2019. The change was primarily due to an increase in clinical trial activity and associated drug manufacturing costs for ZW25, as well as an increase in other research and discovery activities as compared to the same period in 2019. Research and development expenses also included non-cash stock-based compensation expense of $2.0 million from equity classified equity awards and a $1.8 million recovery related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
For the three months ended March 31, 2020, general and administrative expenses were $7.6 million as compared to $9.0 million in the same period in 2019. The change was primarily due to a decrease in employee compensation expense relating to non-cash stock-based compensation, which was partially offset by an increase in head count in 2020 over 2019, associated with year-over-year corporate growth. General and administrative expenses included non-cash stock-based compensation expense of $2.2 million from equity classified equity awards and a $5.4 million recovery related to the non-cash mark-to-market revaluation of certain historical liability classified equity awards.
Net loss for the three months ended March 31, 2020 was $31.1 million as compared to $13.6 million in the same period of 2019. This was primarily due to the decrease in revenue and increase in research and development expenses referred to above, partially offset by higher interest and other income as well as lower general and administrative expenses.
Zymeworks expects research and development expenditures to increase over time in line with the advancement and expansion of the Company’s clinical development of its product candidates, as well as its ongoing preclinical research activities. Additionally, Zymeworks anticipates continuing to receive revenue from its existing and future strategic partnerships, including technology access fees and milestone-based payments. However, Zymeworks’ ability to receive these payments is dependent upon either Zymeworks or its collaborators successfully completing specified research and development activities.
As of March 31, 2020, Zymeworks had $562.7 million in cash resources consisting of cash, cash equivalents, short-term investments and certain long-term investments.